Altria Group Reports Steady EPS and Expands Smoke-Free Product Line

In a recent earnings call, Altria Group, Inc. reported stable adjusted diluted earnings per share (EPS) for the second quarter of 2024, with a slight decline noted for the first half of the year. The company highlighted its advancements in the smoke-free product market, showcasing growth in the oral tobacco category and the expansion of its smoke-free portfolio, particularly with the introduction of products like on! PLUS. Despite ongoing challenges posed by the illicit e-vapor market, Altria has adjusted its full-year 2024 EPS guidance to a range of $5.07 to $5.15.

### Key Takeaways

– Adjusted diluted EPS remained unchanged in Q2 but decreased by 1.6% for the first half of 2024.
– Altria’s smoke-free portfolio, including NJOY and on! brands, demonstrated growth and increased market share.
– The company faces regulatory challenges due to the illicit e-vapor market but is advocating for enforcement and harm reduction measures.
– Altria has revised its full-year 2024 EPS guidance to $5.07-$5.15.
– The company continues to prioritize a strong balance sheet and maintain an investment-grade credit rating.

### Company Outlook

– Altria anticipates adjusted diluted EPS for the full year to fall between $5.07 and $5.15.
– The firm expresses optimism about the growth prospects for its smoke-free product lineup.
– Plans include managing long-term profitability while reducing promotional spending on the on! product year-over-year.

### Bearish Highlights

– There is stagnation in the smokable segment, where rising operating margins are not resulting in increased volume.
– The illicit vape market’s influence continues to affect legitimate product sales and consumer behavior.
– The company has noted headwinds from inventory, with declines in cigarette industry shipments.

### Bullish Highlights

– NJOY’s retail share and volume saw an increase in Q2, bolstered by FDA marketing orders for menthol e-vapor products.
– Growth in the oral tobacco category remains strong, with nicotine pouches accounting for nearly 42% of the market.
– Helix reported a 37% increase in shipment volume, totaling 41 million cans.

### Misses

– Adjusted diluted EPS dropped by 1.6% in the first half of 2024.
– There was a lack of specific commentary on the ongoing declines in industry volume.

### Q&A Highlights

– Altria is investing in Marlboro Black to attract price-sensitive consumers and expects tailwinds from the expiration of the legal fund.
– The firm is pushing for a comprehensive enforcement approach to address illicit vape products.
– Altria remains open to legislative changes but believes the FDA already possesses the necessary regulatory tools.
– Emphasis was placed on retaining an investment-grade credit rating, alongside plans to utilize excess cash for share repurchases and debt reduction.

In summary, Altria Group is navigating a complex market landscape with a consistent focus on expanding its smoke-free product portfolio while maintaining financial health. The strategy includes advocating for regulatory enforcement against the illicit e-vapor market and leveraging growth in the oral tobacco segment. Given its adjusted full-year guidance and commitment to financial stability, Altria aims to further its transition towards a smoke-free future.